For Immediate Release
July 7, 2016
ABA Media Contact: Mike Townsend
(202) 663-5471
Email: mtownsend@aba.com
Follow us on Twitter: @ABABankers

Consumer Delinquencies Fall in 7 of 11 Categories in First Quarter

Installment Loan Delinquencies Remain Near Historical Lows

WASHINGTON – Delinquencies in both closed-end and open-end loans fell in the first quarter as consumers continued to manage their finances responsibly, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin.  Delinquencies were lower in seven of the 11 individual loan categories compared to the previous quarter. 
 
1Q2016DeliBullpic.pngThe composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 3 basis points to 1.38 percent of all accounts – continuing a three-year trend of remaining well-below the 15-year average of 2.23 percent. (See Historical Graphic.)  The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
 
“More people have jobs, wages are higher, home values have increased and consumers didn’t overextend themselves during the holiday season,” said James Chessen, ABA’s chief economist. “Even with a mild slowdown in the economy in the first quarter, consumers have shown a remarkable ability to ensure their debt levels are manageable.”
 
Home-related delinquencies fell in two out of three categories. Home equity line delinquencies fell 3 basis points to 1.15 percent of all accounts, while home equity loan delinquencies rose 6 basis points to 2.74 percent of all accounts after falling 23 basis points in the previous quarter. The first quarter marks the first time since 2008 that both home equity loan and line delinquencies are at or below their 15-year averages. Property improvement loan delinquencies fell 3 basis points to 0.89 percent of all accounts.
 
“As the housing market continues its slow and steady recovery, consumers have more valuable equity at stake, which makes their loan payments even more of a top priority,” said Chessen.  “Growing equity also makes new home equity loans a viable option for qualified home owners. The market for home equity loans and lines will likely continue to grow as a larger pool of qualified borrowers looks to take advantage of low rates to make property improvements or pay off higher-interest debt.” 
 
Bank card delinquencies fell slightly in the first quarter, dropping five basis points to 2.47 percent of all accounts.  They remain well below their 15-year average of 3.71 percent.
 
Chessen expects low delinquency levels to continue amid stable economic conditions in the U.S. and consumers’ disciplined approach to credit. 
 
“With household wealth near an all-time high and economic fundamentals holding steady, delinquencies are likely to remain near these historic lows,” said Chessen. (See Economic Charts.)  
 
The first quarter 2016 composite ratio is made up of the following eight closed-end loans.  All figures are seasonally adjusted based upon the number of accounts.
 
CLOSED-END LOANS
  • Personal loan delinquencies remained at 1.44 percent.
  • Direct auto loan delinquencies rose from 0.75 percent to 0.81 percent.
  • Indirect auto loan delinquencies fell from 1.54 percent to 1.45 percent.
  • Mobile home delinquencies rose from 3.16 percent to 3.41 percent.
  • RV loan delinquencies fell from 0.96 percent to 0.92 percent.
  • Marine loan delinquencies fell from 1.14 percent to 1.03 percent.
  • Property improvement loan delinquencies fell from 0.92 percent to 0.89 percent.
  • Home equity loan delinquencies rose from 2.68 percent to 2.74 percent.
             In addition, ABA tracks three open-end loan categories:
 
OPEN-END LOANS
  • Bank card delinquencies fell from 2.52 percent to 2.47 percent.
  • Home equity lines of credit delinquencies fell from 1.18 percent to 1.15 percent.
  • Non-card revolving loan delinquencies fell from 1.63 percent to 1.57 percent.
 
Consumer Tips
For borrowers having trouble paying down debts, ABA advises taking action -- sooner rather than later -- to solve debt problems.  Proven tips are listed below.  Additional consumer information on budgeting, saving, managing credit and more is available at ABA.com/Consumers.  
  • Talk with creditors – the sooner you talk to them, the more options you have;
  • Don’t charge more purchases until your problems are solved;
  •  Avoid bankruptcy – it’s a short-term solution with long-term consequences; and
  • Contact Consumer Credit Counseling Services at 1-800-388-2227.
Glossary

Indirect auto loan:  loan arranged through a third party such as an auto dealer.
Direct auto loan:  loan arranged directly through a bank.
Delinquency:  late payment that is 30 days or more overdue.
Bank card:  a credit card provided by a bank.
Closed-end loan:  a loan for a fixed amount of money with a fixed repayment period and regularly scheduled payments.
Open-end loan:  a loan with a fixed amount of available credit but a balance that fluctuates depending on usage such as a line of credit.
 
The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.
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